I know it's been all over the news since the 20th of September, that we are now out of a recession since June. But I am curious, where the hell have I been all of this time. Who is stating these facts? Did we just pull millions of dollars magically out of a hat?
Let's look at several facts.
-- We are going into an election period. So is this just 'feel good' talk to get one to think otherwise?
-- The Homebuyers Tax Credit. In my opinion, that artificially stimulated the economy. But that helped some real estate numbers look good, like there was a real recovery.
-- Jobs? Sure, some jobs have been created, but within the government and this could add to the free spending that has taken place. So how has that helped. What about those small businesses that keep laying off or close shop. Just some ideas for food for thought.
-- Foreclosure numbers keep rising and mortgage modifications not only become more difficult, but 50% or more that are helped, fail 6 months later.
If you don’t want the truth or face the facts, don’t continue reading.
So let’s define recession. All definitions below are from wikipedia. “A recession in economics is a business cycle contraction, a general slowdown in economic activity over a period of time.” There seems to be two strong definitions of recession outside of what was just mentioned.
- The main rule of thumb, which is simply defined “as a period when GDP falls (negative real economic growth) for at least two quarters. The GDP is the measure of a country’s overall economic output.”
- Then you have the NBER, the National Bureau of Economic Research, who is generally seen as the authority for dating U.S. recessions. The NBER states a recession “as a significant decline in the economic activity spread across the country, lasting for more than a few months, normally visible in real GDP growth, real personal income, employment not to include farm payrolls, industrial production, and wholesale-retail sales.”
Here is what scares me the most. Back in mid 2007 to early 2008, I had written several times which can be documented that we have been in a slight recession since early 2007. But look at this. It wasn’t until December 2008 that the NBER stated that the recession had started one year earlier, in December 2007. Here is a good article from MSNBC, ‘Great Recession’ over, research group says.
So here is the main question at hand. What or who actually determines when we are out of a recession? Glad you asked, because it seems to be based on more of a thought process than in general terms. What specific numbers that look good in a month or two, when in reality, the overall picture is not good. And common sense? My common sense tells me that it's not getting better. Read along....
We don't want bad news, that is all we hear. We hate doom and gloom. But if we don’t know about it or think things are better just because we are told so, how does one fix the problems that we face now as a country? I certainly don’t want to be sweeping this under the rug, just because it’s been determined that we are now out of a recession.
What should be very important and talked about most, right now, so we can move forward?
- Unemployment/jobs – What happened to this so-called stimulus package in May 2009 that was going to stimulate jobs? The only jobs I truly saw created were those within the government.
- Small businesses – we need to keep focus on helping the small business not fail. In my opinion, without small businesses, it will hurt our economy greatly.
- Real Estate – Home values have plummeted in many areas. We are still seeing more and more foreclosures and over 50% of those that get mortgage modifications, fail on their payment plans 6 months after.
- Wall Street – It’s been a yo-yo for the last 12 months, with hardly any consistencies. Up 100 pts, down 100 pts. People are afraid to invest. Many would rather keep the money under their mattress.
Mark Zandi, chief economist at Moody’s Analytics, made this statement. “It was noteworthy that the panel settled on June, as it was during that month that the spending from the Recovery Act stimulus was at its maximum.”
In my honest opinion, I think nothing should have been said, because every month I see specific numbers fluctuate up and down. I didn’t graduate Harvard with an MBA in Economics, but from talking to so many on the streets, seeing it daily with my own two eyes, small businesses going out of business, we have a ways to go. Why try to make us feel good with such a statement, based on numbers that keep changing, or indicators that can be manipulated. Could this just be a political spin because of the upcoming elections?
There needs to be a call to action and that Main Street America deserves more than just some ‘feel good’ words. How can we help? Your vote means more now than ever before, this coming November. It’s a start and we need a fresh start. We need to think this through and all come together. What do you say?
Lewis Poretz even wrote about this and stated all of what I stated in simple terms.
Myrl Jeffcoat gives an excellent quote from Charles Dickens at the end of her post... please go and read it.
Here is some more news... Durable goods orders fall 1.3% in August, missing expectations
Just more reason why I think, again, that we jumped the gun in stating that the reason is over....